For nearly 650,000 Los Angeles households living in rent-controlled apartments, the rules governing how much their rent can rise each year are about to change—with a new formula that sets allowable increases at 4%.
Under a new formula approved by the Los Angeles City Council on Wednesday, annual rent hikes for rent-stabilized apartments will now range between 1% and 4%, depending on inflation. That will be applied to the roughly 74% of the city’s multiunit rental stock. Rents will rise by 90% of the Consumer Price Index, but never fall below 1% or rise above 4%. That means most renters will see smaller and more predictable rent hikes than under the current system, which allows increases between 3% and 8%.
The vote marks the most substantial change to the city’s’ Rent Stabilization Ordinance (RSO) since 1985. The RSO governs most apartments built on or before Oct. 1, 1978 and remains a cornerstone of housing affordability in a city where more than half of the renters spend more than 30% of their income on housing.
“Our affordability crisis is making Los Angeles less resilient, is making it less possible for people to live here,” said Councilmember Nithya Raman, chair of the Housing and Homelessness Committee, just before the final vote. “We have to make it possible.”
The final policy differs from what the Housing Committee advanced last week, which recommended tying increases to 60% of CPI tie and capping hikes at 3% with no minimum floor.
Currently, LA’s rent-stabilized units use a formula that allows rent increases between 3% and 8%, depending on inflation, and can reach as high as 10% if a landlord pays for utilities.
The new structure narrows that range, more tightly links it to inflation, and eliminates the extra 2% increase previously allowed for landlords who covered gas and electricity.
The Council approved the update in a 12-2 vote, with Councilmembers Bob Blumenfield and John Lee opposing it,
The vote came after hours of tense and emotional public testimony from both tenants and landlords, who packed the chamber and spilled into overflow areas. Landlord groups held signs reading “We Housed LA,” while tenants advocates rallied outside City Hall earlier in the morning.
Andrej Selivra, who rents a two-bedroom rent-stabilized apartment in Palms for about $2,250 a month, said the vote is “progress but not perfection.”
“I’ve actually been quite a huge beneficiary of the rent stabilization ordinance,” Selivra said. “Without it, honestly, I would be in a very much worse financial situation, and I would have probably almost no savings. … The truth is the wages aren’t going up at the same price as the rents are.”
Phillip Walker, who is paying $2,800 a month for a studio in District 9, said he was struck by how much of Wednesday’s debate centered on landlords’ financial challenges.
“They are a government, they are supposed to help the people of the city, and yes, the landlords also exist in the city. They also pay taxes, but this is not their private investment firm,” he said, adding “there are no landlords without tenants.”
Fred Sutton, spokesperson for the California Apartment Association, said the group was “very disappointed” in the vote.
“Nothing they did today is going to help make the housing crisis better,” Sutton said. “They didn’t build a single new unit. All they did is help peg owners below inflation, which over time will make it harder and harder for owners to upkeep their properties, force independent rental owners out of business, and ultimately make housing for everybody in this city more expensive and harder to find.”
Some economists, meanwhile, offered a very different diagnosis of L.A.’s affordability problems.
Christopher Thornberg, a founding partner at Beacon Economics, said the new formula addresses the wrong problem. He argued that rent burdens in L.A. rise mostly when households move — not because landlords hike rents on existing tenants. The city’s problem, he said, is a severe shortage of housing supply, not rising rents on rent-stabilized units.
“So what have you accomplished by cranking down the maximum rent? When any of these units become vacant, now the landlord’s going to have to raise the rent a lot because they can’t afford to fall behind, given rising costs of managing apartments and fixing them when they need to be fixed.”
Thornberg said the rent control formula is based on “a narrative that is wrong,” rather than the underlying economics.
“Doesn’t matter how they come up with the number,” he said. “Our problem in Los Angeles is we don’t have enough new supply coming online and they’re not doing anything to fix that. Instead, they’re simply making more restricted rent control on some units, which is going to end up being a larger burden on the very people they’re trying to protect, which is lower-income families.”
Thornberg’s critique echoed the concerns of the measure’s two “no” votes on the City Council.
Councilmember John Lee said the new formula risks discouraging investment and accelerating the deterioration of the city’s aging stock.
“This Council has fought hard to increase production, and we shouldn’t undermine our own progress,” Lee said. “If the goal is protecting tenants, then shrinking the rental market, pushing out small landlords and slowing construction, is the wrong move.”
Councilmember Blumenfield said he backed adding rent banking, calling it essential to keeping the system “even-steven” over time.
“For me, the most important piece of this entire reform is rent banking, because over time, that allows us to at least keep true to the concept of what we’re talking about, which is keeping the rent increase at zero, adjusted for inflation,” Blumenfield said.
Councilmembers introduced a flurry of amendments before the final vote. In addition to adopting the 1% floor and 4% ceiling on annual rent increases — and tying allowable rent hikes to 90% of the CPI — the City Council approved a policy instruction directing the Planning and Housing Departments to report back within 30 days on how the lower rent-increase limits might affect new housing production and what mitigation strategies the city should consider.